On Thursday, the Supreme Court decided to reject the electoral bonds scheme that the Indian government introduced in 2018 to allow secret donations to political parties.
A panel of five judges expressed the view that addressing the issue of illegal money in politics could be done with less severe actions.
Two judges shared similar opinions on the matter. Chief Justice of India DY Chandrachud spoke on behalf of himself and Justices BR Gavai, JB Pardiwala, and Manoj Misra. Justice Sanjiv Khanna also provided a separate but agreeing opinion.
Here are the key points from these opinions:
Money, Politics, and Voting Rights: According to Chief Justice of India (CJI) Chandrachud’s opinion, there is a strong connection between money and politics. Knowing how political parties are funded is crucial for voters to make informed choices during elections. The Court emphasized that financial contributions to a political party might result in quid pro quo arrangements due to the close link between money and politics.
Electoral Bonds Not the Best Way to Control Illegal Funds: The Supreme Court decided to strike down the electoral bonds scheme mainly because of its disproportionate impact. The Court pointed out that there are alternative methods to prevent illegal money in electoral financing that have a lesser impact on voters’ right to information. In simple terms, the Court found that the electoral bonds scheme did not meet the standard of being the least restrictive means to tackle the issue.
Proportionality of the Electoral Bonds Scheme: Justice Sanjiv Khanna, in his concurring opinion, also discussed the proportionality of the electoral bonds scheme. He concluded that the right of voters to know is more important than the need for anonymity in political party funding. Justice Khanna stated that while secret ballots are essential for fair elections, transparency—rather than secrecy—in funding political parties is necessary for free and fair elections. According to him, the confidentiality of the voting booth does not extend to keeping contributions to political parties anonymous.
The Court said that individuals have a right to keep their political beliefs and affiliations private, including their contributions to political causes. However, this right has its limits, especially when contributions aim to influence policies.
The Court emphasized the need to balance a voter’s right to keep their political affiliations private with the right of other voters to be informed about the funding of political candidates. In this context, the Court found that the electoral bonds scheme excessively favored protecting the privacy of political affiliations while disregarding the voters’ right to information.
The Court pointed out that the government failed to demonstrate that the specific measure in clause 7 (4) of the Electoral Bonds Scheme was the least restrictive way to balance these rights. In essence, the Court concluded that the scheme did not strike a fair balance between the right to keep political affiliations private (referred to as “informational privacy”) and the voters’ right to know (referred to as “informational interests”).
The Court highlighted that the unique feature of the electoral bonds scheme was the “anonymity of the contributor.” If this anonymity element is removed, the Court explained, the entire Electoral Bond Scheme 2018 would be deemed unconstitutional. Consequently, this was a significant factor leading to the complete rejection of the electoral bonds scheme.
It was deemed highly unreasonable to permit unrestricted corporate donations. The Court highlighted that corporate donors differ from individuals as their contributions to political parties are viewed as business transactions intended to secure benefits.
The Court criticized the electoral bonds for allowing even loss-making companies to make undisclosed political donations. This was seen as problematic since loss-making companies are more likely to engage in quid pro quo arrangements, according to the Court.
As a result, the Court concluded that the choice to let corporate donors make unlimited and anonymous political donations was manifestly arbitrary and violated the right to equality under Article 14 of the Constitution. The Court emphasized that amending Section 182 of the Companies Act to permit unlimited corporate contributions allows companies to exert unrestrained influence on the electoral process, contradicting the principles of free and fair elections and political equality encapsulated in the concept of ‘one person, one vote.’
Justice Sanjiv Khanna, in his opinion, rejected the government’s argument that the electoral bonds scheme aimed to protect political donors from retaliation by the party in power due to their affiliation with a rival party. He emphasized that transparency, not secrecy, is the solution, as secrecy restricts the collective right to information and knowledge, acting as a check against retribution and victimization.
The judge also expressed concerns about possible money laundering, stating that by ensuring anonymity, the policy allows money laundered through quid pro quo or illegal connections to escape public scrutiny.
